MAY EXPIRATION – Running It Down and Rolling It Out (CAT, TPR, ESI, BLDR, FCX, CROX, WMS)

Posted on May 21, 2021

Top ‘o the chop to ya.

We’ve got seven trades that require your attention, so let’s get to it.

We begin with our CAT initiative from March 3rd.

The communiqué was called Slip of the CAT Got Your Forked Tongue? and it urged you to sell the CAT May 21st 220/230 CALL spread for $3.30 and buy the CAT May 21st 220/190 PUT spread for $11.30.  Total debit was $8.00.

Today, the short CALL spread will likely close in-the-money, which means we have to act to offset it.

With CAT shares now on the precipice, we feel it wise to set the CAT September 17th 210 synthetic short** for a credit of $23.95 (30.55/6.60).

That will put us in a net credit position of $5.95 and allow us full participation in any downside.

[**sell the 210 Call/buy the 210 PUT]

Our TPR bet came to you in a letter dated January 27thWhat Ever Happened to Adidas Shirts and Corduroy Pants?  There, we urged you to sell the TPR May 21st 35/40 CALL spread for $1.25 and buy the TPR May 21st 35/25 PUT spread for $4.55.  Total debit was $3.30.

And today, like CAT, we’re facing the full loss on the short CALL spread.

That means we’re setting the TPR November 19th 35 synthetic short for a credit of $8.35 (10.40/2.05), a move that will flip our debit to a credit of $0.05 and offer us an opening to profit from further downside.


On December 14th we opened an ESI trade in a missive called Are The Chemicals That are Killing You Produced by This Company?  The recommendation was to sell the ESI May 21st 15.00/17.50 CALL spread for $0.95 and buy the ESI May 21st 17.50 PUT for $2.75.  Total debit was $1.80.

Ditto here…

We’re in the hole $4.30, and require swift action to correct it.

So we’re setting the ESI November 19th 20 synthetic short for a credit of $1.95 (3.40/1.45).  That reduces our debit to just $2.35 and leaves the downside open for further profits.

Our BLDR initiative, whose details can be found HERE, has us holding the May 21st 32 synthetic short alongside a credit of $0.60.

The short CALL is in-the-money to the tune of $12.00, roughly (we’ll get final numbers to you on Monday).

So that means we’re acting.

Like this –

We’re again setting the January 21st synthetic short at 32 for a credit of $12.55 (14.70/2.15).

That will flip our debit to a credit of $1.15 (check back Monday for final numbers) and open the downside to further profits.


Next up is our FCX trade, whose details are available HERE.

In short, we’re sitting on the May 21st 30 synthetic short and holding a debit of $0.65.

Here, too, we’re acting, because our short 30 CALL is in-the-money.

Reset the FCX November 19th 30 synthetic short for a credit of $10.98.

That will reduce our debit to roughly $1.40 and keep the downside open to potential profits.

Exact numbers, again, after the weekend.

Winding Down

Our CROX trade has us holding the CROX 50 synthetic short and a credit of $4.25.

With the short CALL now trading in-the-money we’re moving like this –

Sell two (2) CROX September 17th 70 CALLs for $29.70 each, and buy back the open CALL at the close.  That will expand our existing credit to roughly $14.00 (final numbers Monday).

Last but not east, the details of our WMS trade, found HERE, can be summed as follows –

We’re short two (2) May 21st 85 CALLs and are holding a credit of $12.00.

The CALLs are in-the-money and have to be rolled out.

Just before the close, buy them back and sell two (2) WMS September 17th 90 CALLs for $20.20 each.  That will reduce our existing credit to roughly $8.00 and give us another four months to wait out the storm.

All is in the hands of Heaven – save the fear of Heaven.

So fear Heaven.

Eschatologically yours,

Alan B. Harvard


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